Norfolk Southern Rewards Investors, OK's New Buyback Plan

Shares of Norfolk Southern Corporation NSC have performed well so far in 2017. The stock has gained 22.4% on a year-to-date basis, outperforming its industry’s rally of 21.6%.

 

Additionally, shareholders of this railroad operator were in for another good news recently. In a bid to enhance its shareholders’ value, the company’s board of directors of approved a new share buyback program. The company is now authorized to buy back an additional 50 million shares through Dec 31, 2022.

Notably, Norfolk Southern has been rewarding shareholders through buybacks since 2006. Following the new authorization, the total number of shares that may be bought back now stands at 225 million as opposed to 175 million earlier. In fact, the company has repurchased approximately 43 million shares for $3.8 billion between Aug 1, 2012 and Sep 25, 2017 with approximately 9 million shares remaining as of the latter date.

Furthermore, the company’s shareholder friendly attitude can be discerned from the fact that while releasing its second-quarter results in July 2017, it had increased its full-year 2017 target pertaining to buybacks from $800 million to $1 billion. Earlier in 2017, the company raised its quarterly cash dividend by 3% to 61 cents per share (annualized $2.44 per share).

Going forward, Norfolk Southern expects its bottom line to expand in double digits by 2020 (compound annual growth rate). Markedly, the company’s decision to approve a new buyback plan is in line with the objective. We note that share repurchases benefit a company’s earnings per share by lowering outstanding share count.

Zacks Rank & Stocks to Consider

Norfolk Southern carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader Transportation space are Kansas City Southern KSU, GOL Linhas Aéreas Inteligentes S.A. GOL and United Parcel Service UPS, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Shares of Kansas City Southern and GOL Linhas have rallied more than 28% and 100%, respectively, on a year-to-date basis.

United Parcel Service has seen the Zacks Consensus Estimate for current-year earnings being revised 0.8% upward over the last 90 days.

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Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
 
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